Indirect Cashflow
I'm revising CFA L1 FRA material right now and there's one thing I can't quite wrap my head around. Should I include in the calculation of working capital changes for indirect cash flow method payables from asset purchases? Imagine the following situation: During FY2019 I bought a fixed asset for 10 kUSD but haven't paid for it yet. Let's presume it's the only transaction in my books I had in the whole year. So from the perspective of the indirect cash flow I have a negative change of working capital and an increase in fixed assets. Which means that my operating cash flow should be negative (-10kUSD) if I rely on standard indirect cash flow proforma, which is obviously incorrect since I haven't spent a dollar this year. So my question is - should I always remove payables for fixed assets from the calculation of the working capital or my logic is flawed somehow? Thanks
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